Malaysian Financier Tony Fernandez AirAsia Asked Upward Upon $238 Million To Put Supplies Back, Digital Pivot.

Key Sentence:

• AirAsia Group – controlled by Tony Fernandez – says Monday evening.

It will increase to 1 billion ringgit ($238.6 million) by issuing convertible bonds to existing shareholders as the low-cost carrier prepares to resume flights at the end of the year and its digital platform builds.

Under the proposed fundraising measure, existing shareholders can subscribe to 7-year unsecured Islamic debt securities (RCUIDS) with a par value of 0.75 ringgit based on two RCUIDS for every six shares held by AirAsia. In addition, debt securities come with warrants that can be released free of charge.

“Fundraising is an important part of our recovery strategy,” Fernandez, 57, AirAsia Group CEO, said in a statement.

The new shareholder money will provide the airline with ample liquidity to deal with the impact of the ongoing Covid-19 pandemic, which is holding back countries such as Malaysia and Australia as governments seek to limit the spread of the virus.

AirAsia was in the red for the seventh straight quarter and reported a net loss of RM767.4 million in the first quarter. Funds from RCUID’s rights issue, which is expected to be completed in the fourth quarter, will be used to run fuel insurance, lease aircraft, and fund the group’s digital initiatives, the company said.

“While the airline will continue to support all operations, our digital transformation strategy has gained momentum over the past 18 months with significant improvements across all key performance indicators for our super app Airasia, logistics and teleportation e-commerce, and our fintech business BigPay,” said Fernandez.

BigPay – which aims to expand services beyond international remittances and digital payments – is seeking one of the five digital banking licenses Malaysia has to offer. Last week, the airline agreed to take over Gojek’s operations in Thailand through a share swap, which would provide the Indonesian giant with 4.76% ridesharing with AirAsia Digital.

Fernandez later said the deal, which AirAsia Digital valued at $1 billion, would “boost” the airline’s ambitions to become one of Southeast Asia’s leading super apps.